Rate increases

Okay folks I know this is a common topic here on the forum but I'm going to bring it up once again. This is a combination of a vent and a request for advice.

I haven't raised my rates since 2012. I went from $42 ft to $43 and $43 pt to $45. Prior to this I hadn't raised my rates since 2010. It is in my contract that I raise my rates annually in January which everyone signs to acknowledge but I haven't been able to raise them due to area averages.

Well I am conscious of the fact that come January it will be 3 years since a rate increase yet costs still go up and now as someone else pointed out, minimum wage has gone up 75 cents an hour in Ontario too. I really am overdue a raise. To point out the obvious though, this wouldn't be a pay rise at all, simply a rate increase to cover the rising cost of food, utilities and supplies. Here's the thing though...

In my area, I live in a relatively small town but a lot of people commute to TO from here, 3 years ago there were only about 5 daycares advertising and the going rate was $40 a day ft and $43 part time. When I raised my rates in 2012 only one other provider put her rates up in addition to me but I could justify it due to supplying organic food. In the last 2 years at least another 10 providers come up in online searches now and the average they are charging is $30 a day. I know people constantly say that if you can justify the higher daily rate and you are worth it then go for it as people will pay for it but the reality of this is very different.

There are a huge amount of providers who are stay at home mums charging substantially less money for daycare daily who are fantastic providers. I number of them in my area also have a background in ECE and/or were teachers prior to going on their own mat leave. How the heck do I compete with that!?! Contrary to what a lot of people think and say, cheaper rates do not automatically mean mediocre care. Yes there are a bunch of them who are not even close to okay, but there are just a whole load who don't necessarily need the second income so charge less because they can and see it as some personal money to make while staying home with their own children.

Now if my phone was ringing off the hook and I was scheduling interviews left right and centre then I am sure that my daycare and experience would sell themselves but daycare enquiries are still scarce right now. In addition to that, how can I justify my rate to parents who find a good daycare provider charging 10-15 less a day? Okay so maybe they aren't as great as an established provider but how can a parent ever really know until they have experienced them. I know two providers in my town with 10+ years experience and great setups who should really not be caring for children and almost every parent I interview who have been to them prior to me, comment on how awful they are so really its not like parents know that experience means better care, or that better care is not cheap. Its never as cut and dry as that.

So what the heck do I do? I wanted to raise my rates from $45 to $47 come January but I can't fill my spots as it is, but it costs me more money annually so due to these cheapy rates that are eating through my town, I am now taking a hit to my earnings annually. I tell you what I want to do, I want to set up a home daycare association in my area and try and explain to all these cheapys the impact they are having on the local industry and that they need to charge more. My husband suggested I do this a couple of years ago but I said no as people can charge what they want as providers offer different things so justify their fee differently but now I am thinking differently as look at what has happened as a result of this mass undercutting.

I am so frustrated. I am literally only staying doing daycare because of the obvious benefits of being here for my kids who don't really need me to see them off to school or be here after school now they are older, but I compare working outside of the home and the hourly rate and cost of commuting and it still makes more sense to do this till I go to school, but every year I don't raise my rates I make less money as my costs always go up and I'm more than a little pissed off now. People working in Superstore and Food Basics make more money than me. Really how does that even make flipping sense!?!?! :huh:

I hear you! I am west of the GTA but most neighborhoods here are full of home daycares. I am priced with the highest at $40 but see many advertised between $20-$30. There are seriously 50 plus within reasonable driving distance from my house listed on daycare bear....then there's kijiji!!

I guess you really only have two choices:

Take your chances and raise it, hoping your clients stay.

Stay where you are and take the loss.

For the record.....I don't "need" the money to pay for essentials but I certainly think my time and effort are worth the max I can get.

Some ideas:

You are in it for the long haul? (Or at least have been, I think I remember you saying that you were going back to school...) Regardless, play up your experience. "Established in home daycare providing experienced, reliable and high quality programming blah blah blah"

It is frustrating. I charge $5 more than everyone else for FT and $10 more for PT. My prices did turn away a lot of potential clients but I did manage to fill my spots, just took some extra time. I kept thinking that this is how I want to run my program, this is what I want to offer, I deserve to be fairly compensated AND want parents who appreciate what I am offering. I don't want clients who think I charge too much ~ they are the ones who don't care what I offer. I want parents who appreciate my hard work and I also think we DO deserve to make a living just like anyone else. Venting with you I guess.

I really don't have any concrete advice other than keep playing up what makes you stand apart and above the competition. Play up the quality of food you are offering, your experience, your reliability, etc. Those that care will notice.

It's tough brightsparks...I was once one of those who charged way too low when I first started out. I did it because honestly I really did not know any better, I did not fully grasp the impact of charging 10$ less than the going rate, and I desperately wanted to fill spaces, especially that first one.

Fast forward maybe 1 or 2 years and I am now charging the going rate, 40$ per day in Ottawa. But friends of mine who are currently looking for daycare interviewed a caregiver who was charging 27$ per day and you know what? They were put off by the low rate because it seemed sketchy. And honestly I don't see how anyone can do daycare LONG TERM making so little money. It's super frustrating because it definitely impacts ALL of us but I don't see that there is much we can do.

Quote:

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Originally Posted by bright sparks

Okay folks I know this is a common topic here on the forum but I'm going to bring it up once again. This is a combination of a vent and a request for advice.

I haven't raised my rates since 2012. I went from $42 ft to $43 and $43 pt to $45. Prior to this I hadn't raised my rates since 2010. It is in my contract that I raise my rates annually in January which everyone signs to acknowledge but I haven't been able to raise them due to area averages.

Well I am conscious of the fact that come January it will be 3 years since a rate increase yet costs still go up and now as someone else pointed out, minimum wage has gone up 75 cents an hour in Ontario too. I really am overdue a raise. To point out the obvious though, this wouldn't be a pay rise at all, simply a rate increase to cover the rising cost of food, utilities and supplies. Here's the thing though...

In my area, I live in a relatively small town but a lot of people commute to TO from here, 3 years ago there were only about 5 daycares advertising and the going rate was $40 a day ft and $43 part time. When I raised my rates in 2012 only one other provider put her rates up in addition to me but I could justify it due to supplying organic food. In the last 2 years at least another 10 providers come up in online searches now and the average they are charging is $30 a day. I know people constantly say that if you can justify the higher daily rate and you are worth it then go for it as people will pay for it but the reality of this is very different.

There are a huge amount of providers who are stay at home mums charging substantially less money for daycare daily who are fantastic providers. I number of them in my area also have a background in ECE and/or were teachers prior to going on their own mat leave. How the heck do I compete with that!?! Contrary to what a lot of people think and say, cheaper rates do not automatically mean mediocre care. Yes there are a bunch of them who are not even close to okay, but there are just a whole load who don't necessarily need the second income so charge less because they can and see it as some personal money to make while staying home with their own children.

Now if my phone was ringing off the hook and I was scheduling interviews left right and centre then I am sure that my daycare and experience would sell themselves but daycare enquiries are still scarce right now. In addition to that, how can I justify my rate to parents who find a good daycare provider charging 10-15 less a day? Okay so maybe they aren't as great as an established provider but how can a parent ever really know until they have experienced them. I know two providers in my town with 10+ years experience and great setups who should really not be caring for children and almost every parent I interview who have been to them prior to me, comment on how awful they are so really its not like parents know that experience means better care, or that better care is not cheap. Its never as cut and dry as that.

So what the heck do I do? I wanted to raise my rates from $45 to $47 come January but I can't fill my spots as it is, but it costs me more money annually so due to these cheapy rates that are eating through my town, I am now taking a hit to my earnings annually. I tell you what I want to do, I want to set up a home daycare association in my area and try and explain to all these cheapys the impact they are having on the local industry and that they need to charge more. My husband suggested I do this a couple of years ago but I said no as people can charge what they want as providers offer different things so justify their fee differently but now I am thinking differently as look at what has happened as a result of this mass undercutting.

I am so frustrated. I am literally only staying doing daycare because of the obvious benefits of being here for my kids who don't really need me to see them off to school or be here after school now they are older, but I compare working outside of the home and the hourly rate and cost of commuting and it still makes more sense to do this till I go to school, but every year I don't raise my rates I make less money as my costs always go up and I'm more than a little pissed off now. People working in Superstore and Food Basics make more money than me. Really how does that even make flipping sense!?!?! :huh:

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Only other thing I can think of, aside from raising rates, is to cut your costs. I know you provide organic food for the daycare, but is it absolutely necessary that it all be organic? Would it be a deal breaker for your families? Or perhaps you can cut back on supplies used in some way. At the end of the day, you're doing this to provide for your own family and it has to make money.

I agree with Amanda, maybe cutting costs is a better option?

I agree. You need to cut costs not increase fees. You need to remain competitive. Organic is not necessary IMO and very expensive. Maybe offer a cheaper rate if everyone supplies their own lunch?

Decrease your arts/crafts. I only do them 3 days a week instead of 5 and do a lot of coloring/drawing instead of complicated crafts that require a lot of supplies. I have also made a list of things and asked parents to donate if they had any kicking around at home (buttons, egg cartons, toilet paper rolls, milk cartons etc.)

Amanda and 5LM I think that is the route I will be going. I need to make more money but can't risk raising my rates with the current situation in my town. I have one family now who loves that I am all organic so that may be a sore spot for her but then her son leaves for school in Sept 2015 so I don't think it will be a deal breaker. Everyone else seems happy that it isn't processed foods and all home cooked. I reduced the frequency in which I take the kids out in my minivan to cut costs recently too. I would love to eliminate my van altogether as it would save me a lot, but I need to be able to be their for my own kids in an emergency should the need arise and I would not be able to do that if I didn't have a vehicle to cart all the daycare kids in. Also in the summer months while school is out I wouldn't be able to taxi my kids to their day camps so I just don't take the kids out anywhere unless absolutely necessary or if it isn't within walking distance with the stroller.

Would anyone suggest I even bring up the change in food with any daycare parents?? I feel deceitful to be honest seeing as that is one of my big selling points for daycare regardless of whether or not that one thing was why they chose me or whether it was the overall package I offer. That being said I'd hate to piss anyone off for signing up offering organic and then no longer offering it.

Thoughts??

Quote:

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Originally Posted by bright sparks

Amanda and 5LM I think that is the route I will be going. I need to make more money but can't risk raising my rates with the current situation in my town. I have one family now who loves that I am all organic so that may be a sore spot for her but then her son leaves for school in Sept 2015 so I don't think it will be a deal breaker. Everyone else seems happy that it isn't processed foods and all home cooked. I reduced the frequency in which I take the kids out in my minivan to cut costs recently too. I would love to eliminate my van altogether as it would save me a lot, but I need to be able to be their for my own kids in an emergency should the need arise and I would not be able to do that if I didn't have a vehicle to cart all the daycare kids in. Also in the summer months while school is out I wouldn't be able to taxi my kids to their day camps so I just don't take the kids out anywhere unless absolutely necessary or if it isn't within walking distance with the stroller.

Would anyone suggest I even bring up the change in food with any daycare parents?? I feel deceitful to be honest seeing as that is one of my big selling points for daycare regardless of whether or not that one thing was why they chose me or whether it was the overall package I offer. That being said I'd hate to piss anyone off for signing up offering organic and then no longer offering it.

Thoughts??

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I would tell them.

Quote:

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Originally Posted by mickyc

I agree. You need to cut costs not increase fees. You need to remain competitive. Organic is not necessary IMO and very expensive. Maybe offer a cheaper rate if everyone supplies their own lunch?

Decrease your arts/crafts. I only do them 3 days a week instead of 5 and do a lot of coloring/drawing instead of complicated crafts that require a lot of supplies. I have also made a list of things and asked parents to donate if they had any kicking around at home (buttons, egg cartons, toilet paper rolls, milk cartons etc.)

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The thing with Organic is that just because someone thinks it isn't necessary doesn't make it so....I understand that you stated this as your opinion. It is personal preference and there will for sure be parents looking specifically for this and those who don't care about what food their child is fed. Upon research and education, most people end up coming around to it once they understand the importance of it, while for others it isn't an option due to the added cost. Organic groceries are not overly expensive anymore contrary to what you may think. I buy most of my produce in bulk too which gets my costs down a lot but obviously the elimination of organic produce all together would have a much more significant effect on my purse strings. My bulk grains cost similar to those bought from the grocery store with the added benefit of being whole grains not refined and organic. My cost of food alone is not the only issue. Fuel, Gas, hydro and water have gone up phenomenally which I can't do anything about. Obviously I know then I have to cut back wherever I can to make up for the places where I have no influence. I have a bright daycare room which means I don't need any lights on during the day and right now I don't even have big eaters.

I have such a touchy group of little ones right now who don't even like crafts apart from one. It's not even that they don't do anything but simply that they kick off screaming and crying every time. As a result I now only do crafts for monthly themes and instead do treasure baskets, sensory tubs and malleable play. Loads cheaper and I honestly haven't bought craft supplies in years.